Accountant accuses 'blundering' Revenue of trying to bankrupt him.

If you use an accountant to file your tax return, you might be forgiven for thinking that you are unlikely to be treated like a criminal. However, some clients of one accountancy firm have had tax refunds put on hold and been threatened with criminal proceedings by HM Revenue & Customs as part of a long-running tax investigation.

Christopher Lunn, whose clients have included television presenter Fiona Bruce and actor Sean Pertwee, has been facing an ongoing investigation that could end up with some of his clients paying many thousands of pounds. He says HMRC has attempted to frighten them into paying tax that they do not owe, and that the investigation has been "a catalogue of blunders".

For those concerned, the consequences have been severe. They have had letters informing them that any tax rebates due have been frozen because of the investigation, and others urging them to make a full disclosure of any irregularities that they are aware of in previous tax returns.

One letter, dated July of this year, addressed clients who had not contacted the Revenue "with the intention of making a full disclosure". The letter added: "I have noted that to date you have not contacted me with the intention of making a full disclosure. I will now be checking your tax returns and if I identify any irregularities then I will deal with these matters either by criminal or civil procedures open to HMRC depending on the nature of these irregularities.

"Please note that until we have checked your Tax Returns, HMRC will not be making any repayment of monies shown as being overpaid."

Mr Lunn's business, known as CLAC (Christopher Lunn and Company) deals specifically with media clients. He said this meant that many clients worked on a freelance basis and therefore frequently ended up receiving rebates from HMRC because they were paying tax for months in which they are not working. However clients, including pensioners, are still waiting for money that they believe they are legitimately owed.

An HMRC spokesman confirmed that Mr Lunn's clients were not being paid any money at present. "We have endeavoured, throughout our dealings with CLAC's clients, to give them every opportunity to come forward and discuss their affairs with us," the spokesman said. "We wrote to all clients on 29 July, 2011, explaining that repayments would not be made until all returns had been checked. All repayment claims are currently being reviewed and individual claimants will be contacted shortly."

There is no suggestion that these clients knowingly misled the taxman, but HMRC can investigate returns dating back six years. The letters use the words "criminal investigation" and inform clients that they have taken documents from CLAC's offices.

Despite a long-running investigation, no charges have been brought against Mr Lunn, and he has denied any wrongdoing. None the less, he says he has lost around 20pc of his clients due to the investigation, and that documents that were taken away from him were returned in a fashion that meant that they could not be refiled.

"There must be millions of sheets of photocopied paper that have been returned to me," he said. Each contained sheets of paper that related to many different clients and were not returned in any order, he added. "We estimate it would take 10 years to file it all again," he said. He claims that the Revenue is trying to bankrupt him.

He says that the evidence used against him is "materially false". However, HMRC has said that it has decided that it will not deal with Mr Lunn with regards to clients' tax affairs "due to its unacceptable practices as a tax agent". Mr Lunn took HMRC to court over this decision, and the Court overturned it. However, HMRC has said a second time that it has decided that it will cease to deal with CLAC as a tax agent.

HMRC has said it cannot comment on the case, because of ongoing civil and criminal investigations. However, it said in court last November that it believed that private expenditure had been claimed as business expenses and that it had uncovered falsely claimed expenditure in 98pc of a sample of 450 tax returns filed by Mr Lunn's company. The Revenue also said that some clients had falsely declared that they were self-employed.

However, Mr Lunn said that HMRC had disbanded its media tax unit and that now there was no one within HMRC who understood the tax affairs of those who work in the media. He insisted that his accounting was legitimate. He also claims that the HMRC investigators took documents relating to his daughter-in-law's business and did not return them, incorrectly identified a property as belonging to his son without checking the Land Registry correctly.

A recent report from the Treasury Select Committee criticised the way in which HMRC dealt with those who owe tax and the letters that they send out to people who they believe to be in debt. MPs said that the language in some of the letters sent to clients was "completely inappropriate" if the amount owed by someone is in dispute, where the amount may be zero or where the recipient may be vulnerable. HMRC has said that its response to those who it believes owe tax is "fair and proportionate".